Sales is vanity, profit is sanity
by Karen Malody, FCSI
It all started with the Navy boys. In the 1920s, “Happy Hour” was slang for a scheduled entertainment period on board a ship; this was a valuable opportunity for sailors to relieve the stress accumulated during the long periods at sea. The fun was typically accompanied by alcoholic libations, which enhanced the “happiness” quotient. The act of drinking before dinnertime began around the same time on-shore due to Prohibition. Friends would gather for illegal cocktail hours at speakeasies before they went out to eat since restaurants could not serve alcohol. In 1959, an article featuring military life in the Saturday Evening Post made the term mainstream.
Some posit that this rising phenomenon has recently been accelerated by the increasing passion for eating in bars – not in dining rooms. Many restaurateurs now tell me that guests request bar seats when making reservations. People are comfortable in bars. No real news there.
So when the economic downturn hit a couple of years ago, it made perfect sense in the face of rising food costs (5.2% in 2010), constrained spending, and dismal forecasts that operators turned to the one part of their operation that was already cheaper and redefined it as a full eating day part.
I understand the theory: serve it – CHEAPER – and they will come. And for the most part, exit poll returns proclaim this move a winner. Operators apparently found a way to tread water until until help arrives. But the long term question is: Have I irreversibly converted full-paying loyal customers into Happy Hour hoards? Have I prostituted for short term return the brand I spend possibly years building. A brand built on thoughtful food and precision service, and yes higher prices that I may not be able return to.
There is a check list you can run to determine if you survived in tact or whether you may have sold yourself out.
First: Did you formulate a true Happy Hour concept? Meaning was it based on the intent of Happy Hour which was never to feed people but to entice them, tickle their fancy, relieve their pressures so that they could proceed to dinner relaxed and open to suggestion. OR did you simply cut prices on regular food and end up feeding them so instead of staying when done, they left – with your profits?
Second: Building on the first check point, did you develop a separate menu of items that did not compete nor could be compared to the main menu? OR did you simply cut prices on regular food and . . . .
Third: Continuing to build, did you then cost out every plate, bowl, and handful on the Happy Hour menu so that you did not unknowingly accelerate your fiscal downward spiral? OR did yo simply cut prices on regular food, which contained the profit margin, and . . . .
It’s never been just about the food – never will be. It is about the excellence of experience. See JD Powers 2010 “US Restaurant Satisfaction Study” which reveals that full-service restaurant customers rank service quality and environment over price in determining their level of satisfaction.
In my next blog, I will outline ways to redesign your Happy Hours to get out of the fix you may have gotten yourself into without eroding your margins or brand identity.
